Tuesday, July 24, 2012

No Sparkle In Barclays’ Bob Diamond: Societal Mores Unmoored, What And Who We Honor Today- That Which We Used To Shun

(Above, Bob Diamond Building at Colby College)

This post is about honor: what we honor today in society, who we honor, and why. In particular it is about the kind of honor that gets handed out when we name things. . .

. . As you read on a bit you will realize that there is a good portion of this article that I should have written and posted long ago. Had I done so I would have seemed remarkably prescient. (Does it count if I tell you it was, in fact, written in my head years ago?) Unfortunately, I apologize: Noticing New York readers, I am not a fast writer, there is so much to write, and sometimes I wind up on hiatus and write nothing at all. . .

As it is, it’s time to pick up our story- it concerns that project of ill-renown, the proposed Atlantic Yards mega-monopoly in Brooklyn . . .

Diamond Not Glittering

Bob Diamond, the chief executive of Barclays Bank, recently resigned abruptly and in disgrace over the rate-rigging scandal for which Barclays has been fined £290m ($450m) for manipulating LIBOR rates (LIBOR stands for “London interbank offered rate” a critically important benchmark rate). Barclays is reported to have done so to benefit its traders and cook its books. As Atlantic Yards Report’s Norman Oder notes (See: Tuesday, July 03, 2012, Barclays' Bob Diamond resigns, tainted in scandal; was responsible for arena naming rights deal; will MTA feel chagrin about selling subway station naming rights?)
Mr Diamond is:
The executive responsible for the Barclays Center naming rights deal--rights that New York State gave to developer Forest City Ratner--has resigned in the wake of a scandal. And that puts an asterisk on the first subway station naming rights ever sold by the Metropolitan Transportation Authority*.
(* For an extraordinarily paltry sum- $200,000 per year for 20 years- far below what ought to have been paid.)

If a one-time fine of £290 million seems huge (MSNBC dubs it “a record amount” and remember that pounds are a lot more valuable than dollars) consider it against the kind of compensation and bonus money that Mr. Diamond has been paid: In early 2010 Diamond’s compensation was approximately £63 million even after waiving his 2009 bonus, while in one of the years he did take his bonus he received £21m. (See: July 3, 2012, The Many Facets of Robert Diamond, by Michael J. De La Merced.) The fine was imposed jointly by by U.S. and U.K. regulators.

As the subject of names will be important in the discussion that is about to ensue let’s note that Mr. Diamond’s full name is Robert E. Diamond Jr., that’s Robert Edward Diamond Jr.

Add Mr. Diamond’s name, Robert E. Diamond Jr., to the lengthy roster of individuals involved in bringing into existence the Brooklyn Atlantic Yards and the Ratner/Prokhorov basketball stadium who have exited the scene in ignominy. Mr. Diamond is by no means the only individual involved in the perpetration of Atlantic Yards to wind up besmirched but we’ll save going into an enumeration of that long list for another day and another Noticing New York article.

September 2009 Event Not Previously Written About in Noticing New York

Here is the portion of this particular story I should have written long ago. In September of 2009 I found myself visiting the admissions office of Colby College up in Maine. The college representative handling the orientation was expounding to our small group about the unique attributes of a Colby College education. His adjectives and concepts were all rather vague. I wanted to lock it down with some tangible specifics. “Can you give me examples,” I asked, “of individuals graduating from Colby College in whom you can see represented the kind of traits that this kind of special Colby College education imbued them with?”

“Well, there is Doris Kearns Goodwin, the presidential historian,” (indeed, I had already noted the Doris Kearns Goodwin books, including her 2005 “Team of Rivals,” sitting on the bookshelves at the back of the room dedicated to Colby College authors- I was also quite familiar with her as a dependably tapped talking head on subjects presidential for American Experience documentaries and Charlie Rose shows), . . . “And then there’s”- the Colby College representative straightened his spine as if the individual he was about to announce outranked Ms. Goodwin in stature- “Bob Diamond the head of Barclays Bank.” . . .

. . . He smiled. I scowled.

“You know,” I said, “we come from Brooklyn and a lot of people in Brooklyn have a lot of problems with Barclays Bank and its involvement in putting its name on and money into the basketball arena boondoggle project being forced through with eminent domain abuse. We would consider Mr. Diamond’s role in all of that unethical and harmful to the community.” All of this wound up with me having more discussions afterward with the college admission’s representative and with other parents from our small discussion group about the bad things that Barclays was doing . . . The bad things Barclays was doing that were known at the time.

Immediately though, before the group broke up, the next thing I said was this: “Speaking of putting names on things I noticed that the building outside is called `The Diamond Building’- I gather that the `Diamond’ in that name is Mr. Diamond?” I’d noticed the building coming in (see photo at beginning of article and below). Seeing the building I had already suspected the worst. You see, I was already thinking in those terms, in part because a section of the New York Times I had with me was folded open to an article I was still musing over. It was about how easily money, no matter where from, can get things named after people. New York City Mayor Michael Bloomberg had just rewarded his First Deputy Mayor and long-time top political adviser and strategist, Patricia Harris, in a fashion that was above, beyond and outside of the normal conventions of government employee compensation. He paid $1 million to put her name on a new academic center at her alma mater, Franklin & Marshall College in Lancaster, Pa. (See: A Mayor Prizing Loyalty Pays Costly Tribute to His Top Aide, by Michael Barbaro, September 1, 2009.)

(Above, Bob Diamond Building at Colby College)

Mayor Bloomberg's Purchase of College Honor For His Top Deputy and Political Strategist

This was irksome news because since Patti Harris started working for Michael Bloomberg, going back to at least 1979, she has overseen the distribution of the personal wealth he controls to enhance his political power, including behind the scenes manipulations to change the City Charter mid-mayoralty race, thereby specially permitting Bloomberg a previously proscribed third term. Making the news worse is that, as mayor, Bloomberg has plenty of conflicts of interest with his business enterprises. He engages in transactions with virtually every major business in the city as both mayor and corporate mogul. There is plenty of reason to suspect that those conflicts of interest have in turn, vicious circle-style, enhanced that same wealth Mr. Bloomberg dispenses for political control. In the office of mayor, Bloomberg became the city’s wealthiest individual, his wealth increasing ten-fold from the day he started pursuing politics. The increase in Bloomberg’s wealth could, alternatively, be attributed to the acumen with which he runs his Bloomberg computer terminal business but when he turns that same computer business acumen to city projects he has consistently gotten the city taxpayers fleeced.

Ms. Harris is not the only individual for whom Bloomberg has notable regard: Bloomberg has also promotionally saluted Mr. Diamond as his “friend” at the groundbreaking for the "Barclays" Ratner/Prokhorov basketball arena spearheading the Atlantic Yards land grab. (See: Tuesday, July 03, 2012, Flashback to March 2010: Mike Bloomberg calls Barclays' Bob Diamond "my friend"- which includes a video of Bloomberg’s statement of affinity.)

Colby College Code of Student Conduct

So what kind of careers and individuals get honored at college campuses these days so long as somebody is willing to put up the money? Back in 2009, I thought of looking up the codes of student conduct that apply on the Colby College campus (see: Colby College Code of Student Conduct.) and then making the case that Mr. Diamond’s then known about bad conduct wouldn’t make the grade but that would have been a cheap shot. After all isn’t this what everyone recognizes the world has come to, that adults, banks and the entire financial and political world now conduct themselves by standards we would never accept from or teach to young people? (The exception perhaps being a retroactive acceptance of the bullying student Mitt Romney leading a group to pin down and cut off another young man’s blond hair.)

Diamond and His Money Protested at Colby College

Will Mr. Diamond’s misdeeds catch up with him despite the paid-for honors? A few days ago a small group of demonstrators at the college, roughly a dozen, showed up to demand that Diamond resign from the college's board (he's chairman) and that the college not take money from Diamond again. (See: July 22, Colby College trustee chairman targeted by protesters, by Doug Harlow Maine Morning Sentinel, and Colby protesters decry association with banker tied to LIBOR scandal, Alex Barber, Bangor Daily News, Maine, Sunday, July 22, 2012 at 7:07 am.)

We'll see.

What’s In a Naming? Aspirations? Determinism?

What should go into the naming of something? There are names we associate with an aspirational attempt at determinism, naming things as we hope they might come to be. So we might find that we name a daughter Bella (“beautiful”), or Grace, Faith, Joy, Amity, Charity, Prudence, Felicity, Honor, Ruby, Sapphire (Ruby and Sapphire are actually the same stone in different colors) or Pearl. And maybe sometimes names bestowed might indeed have a deterministic effect: Take note that the last names of the heads of two of the very biggest banks Barclays and JP Morgan (both the subject of ongoing heavily reported scandals), both evoke the same sparkling gemstone (Bob “Diamond” and Jamie “Dimon,” respectively, sounding aurally very similar and both with an auric-ly similar cachet). Another person very involved in the Barclays scandal, the investment banking chief, is named Rich Ricci; not exactly “Ritchie Rich” but pretty damn close. (Image from Wikipedia.)

Maybe names do sometimes deterministically influence outcomes. I have a cousin whose last name is “Judge” and he is . . . A lawyer. A close family friend’s last name is Lawlor and he is also a . . lawyer. The wonderful professor with whom I studied economics in college is named Charlotte Price.

Honoring the Past With an Eye To The Future

With the probable aspirational hope for an influence we have long named things after what we honor. Cincinnati is named after Cincinnatus, the patrician Roman general honored as an example of civic virtue and service to the greater good because he immediately resigned the absolute authority bestowed upon him to defeat invading foreigners after the need had passed. We also honor multitudinous places and institutions, naming them after General George Washington, appreciated for having many of the same qualities of Cincinnatus, much the way we also honor Lincoln with the frequent invocation of his name for places and institutions.

Why do we name a medical school the Albert Einstein College of Medicine or a law school the Benjamin N. Cardozo School of Law? To honor the deeds of great and honorable men. It was once as simple as that.

Indulging In the Purchase of Names and Honor

Certainly, as we are all familiar with, names are sometimes granted as a `thank you’ to honor the giving of substantial amounts of money. But as we see with Ms. Harris the source of the money might not need be where the `thank you’ goes; Ms. Harris gets the honor of her name being on a college building although Michael Bloomberg (with all his business’s financial conflicts working against the city’s taxpayers) is the actual source. Nevertheless, is this practice as simple as it previously was?

In medieval Europe professional pardoners raised money for the church through the practice of selling indulgences, largely regarded (with the benefit of historical hindsight and the advent of the Protestant Reformation) as an abuse. But such “indulgences” went no further than saying that the recipient was freed of the stain of a crime after it had been confessed and repented, not a crime that was prospective or ongoing.

In our modern world of one-stop-shopping efficiency we’ve upped the ante: Now when you plunk your money down on the table you no longer get just an immediate absolution for past bad deeds, you are buying several steps up the ladder’s rungs to receive an “honoring.” You can get that “honor” even when your misdeeds are ongoing; no need for confession or repentance. Those steps get skipped entirely. You are already certified and good to go for the future, no matter what. In the process, bad deeds become presumably good ones.

Ratner’s Brooklyn Museum `Honoring’

So it was when Atlantic Yards developer Bruce Ratner plunked down his money in return for an “honoring” by the Brooklyn Museum. That “honoring” was granted by the museum despite the fact that Ratner was in the middle of one of the most atrocious mega-land-and-subsidy grabs in the city’s history, significantly tailored to the developer’s benefit and the community’s detriment in terms of its out-of-scale, overly-dense design, street closures and seizure and privatizing of public space. Ratner's exchange of money for museum honor came about not so much in spite of the damage he was inflicting but because he wanted to inflict it and needed the assistance of the museum’s “honoring” to help assure that he could do so.

No Cleansing Intervals Now Needed

It is certainly true that wealth has always been able to buy acceptability in society irrespective of how that wealth was earned. But wealth questionably earned wasn’t always an immediate ticket to such access: Admission to society might only come after a decent cleansing interval following misdeeds. I recall coming across information when doing some previous research that during the Gilded Age it wasn’t always that easy for the newly wealthy robber barons and their families to get into society and that their business practices, including how society looked askance at monopolies cornering of the market*, could pose such an obstacle.
(* Unfortunately, I haven’t been able to navigate back to what I remember reading about this so if readers would like to leave more information in comment it would be very welcome.)
If only the wealthy in charge of this city (Bloomberg and Diamond included) would similarly shun monopolies rather than governmentally subsidizing them. But things have changed: In today’s world we can now buy the “honoring” of the very things we as society once shunned. This inversion where behavior which is bad becomes the behavior most likely to be in the public eye with “honorings” will probably accelerate: The disparity of wealth derived from misdeeds and the tilting of playing fields to favor the wealthiest is increasing. As we “honor” these things any societal discouragement of bad behavior goes by the wayside.

Doing the Math on Purchasing The Insurance of Reputational Scotchguard

Going back to the numbers used at the outset of this article for reference, translated into dollars, the “record amount” fine being assessed Barclays Bank by the U.S. and U.K. governments combined is $450 million. Compare that one-time $450 million record fine against annual compensation figures for Mr. Diamond of $98 million (pre-bonus compensation) plus $33 million in bonus compensation ($130 million or so a year?) and then recognize that Mr. Diamond was only one of Barclays executives getting flabbergasting compensation packages. Consider then what small fraction of Mr. Diamond’s compensation Mr. Diamond needed to donate to get an honoring with the naming of a Colby College building after him: a reported $6 million for the building with a total $14 million to the college in recent years (approximately 10%- tax- deductible- of what one year’s compensation might be). Ask yourself: With figures like this in the equation isn’t it worth the bad conduct to have millions left over after spending just a few million as the cost of buying back your honor?

Rescinding Honor?

Are any of these purchased honors likely to be rescinded? In the last few days we saw the unusual spectacle of Penn State, out of shame, removing the statue of Joe Paterno, its highly-compensated football coach and Brown, the university from which Paterno graduated, has removed his name from an award. In addition, in another unusual step the National Collegiate Athletic Association (N.C.A.A.) has erased 14 years of Paterno victories from its official record books. (For more about the Paterno scandal and an analogy with Atlantic Yards about how bad things happen when whistleblowers don’t come forward see Noticing New York’s “Sports Glummery” Series.)

In contradistinction what will happen to honors that have been purchased? Can the contracts for the namings be rescinded to rescind the honors? It’s unlikely that Mr. Diamond or Ms. Harris will one day be stripped of their bought-and-paid-for Colby College and Franklin & Marshall College honors.

Corporate Branding- The Cheap (and Ironic) Purchase of Reputational Honor

These purchases of personal honor for individuals come comparatively cheap. Bought-and-paid-for honor is also cheaply available for the questionable institutions with which such individuals may be connected. As covered by Noticing New York before, government officials are selling the right to corporately brand public assets and spaces. They are doing so inappropriately and for laughably little remuneration in exchange (See: Friday, June 29, 2012, Government Gets Branded.)

Now we are faced with the absolute absurdity that at the very same time there are multiple municipalities suing Barclays Bank and considering what losses and options they have in that regard, New York City will be participating in the promotion of the “Barclays” name with the opening of the “Barclays” Center, subsidized by the taxpayers (mostly the city’s). New York taxpayers have spent the better part of billion dollars in subsidies and incurred a net loss of hundreds of millions. Ironically, the same agencies enlisted to subsidize the financing of the Barclays Center are likely to have suffered LIBOR rate manipulation losses as a result of the bank's manipulations. (See: Friday, July 20, 2012, “Barclays” Center Opening Pending, Bloomberg De-Minimizes Envisioned New York City Lawsuit Against Barclays Bank. Is He Out On A Limb?)

The honor of having the Ratner/Prokhorov basketball arena and two MTA subway stations named after Barclays was sold by New York government very cheap. Technically it was two somewhat separate transactions. First, New York State and New York City gave away the naming rights to the developer for free. The developer, taking the entire mark-up for itself, was then able to sell the rights to Barclays for a $400 million package. Since the $400 million was being paid in over 20 years the present value of that package needs to be estimated as a lower figure, below $200 million. In a subsequent renegotiation, the arena naming rights package was negotiated down from $400 million to $200 million (the present value of that again being less). Stage Two of the transaction was for the MTA to “sell” (give away) the right to christen two of its key subway stations “Barclays” for the insultingly trivial sum of $200,000 a year with a twenty year lock-in of the deal. (See: Sunday, June 28, 2009, Naming a Problem: The MTA Gives Ratner the Right to Name Brooklyn Subway Stations “Barclays”.)

Once again, compare those sums with Bob Diamond’s compensation of perhaps $130 million in any given year.

The Inversion of "Honor"

The awkwardness of the present moment aside, why should subway stations or a publicly paid for arena be named “Barclays” at all. I wrote before:
. . . the name “Barclays” on the arena is merely advertisement with no association with its place or moment in time, no sense of history, and that there was consequently no valid reason for government to confer upon it the very special honor of making “Barclays” a place name in the city.
But even as I said that the granting of the name of “Barclays” on the stations would one day cause us to look back and recall a saga of deceit I probably shortchanged this assessment in one respect. As law professor Frank Pasquale writes in a July 19, 2012 Boston Review essay that is very simpatico with Noticing New York opinions:
Many naming-rights deals are not merely advertising. Rather, they are transparent efforts by dubious enterprises to buy goodwill by permanently associating themselves with famous landmarks.
(See: Names, Trains, and Corporate Deals: Why Public Transit Shouldn’t Sell Naming Rights. See also Atlantic Yards Report’s review of that article: Tuesday, July 24, 2012, Naming-rights deals, suggests law professor, are "transparent efforts by dubious enterprises to buy goodwill by permanently associating themselves with famous landmarks".)

In other words, once again the increasingly predicable inversion we see with “purchased honor” is that the honor of bestowing a name is not done to honor good that was done in the past; the honoring is done to serve as cover for the ill that people hope to get away with in the future.

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